How are mortgage lenders dealing with not being able to verify Borrowers income?
Lenders have traditionally used the 4056T form and submitted to the IRS to verify that the tax returns a Borrower supplies are actually the same as what was submitted to the IRS. With Washington still fighting over the budget the IRS has suspended this service. In fact only auditors and a few essential employees aren’t home eating bon bons.
One creative work around for loans that don’t have fraud alerts on their social security numbers (sometimes having duplicate social security number indicates a Borrower worked under a different number or has poor credit in an alias) is to verify the payment or refund. Borrowers can provide the actual check for tax payment or refund- if this is not available a bank statement matching the exact amount on the return indicates the Federal Tax Return is accurately filed.
After the government gets back to work, the back log of 4506T verifications will be processed and added to closed loan files.
This of course may not work for certain complex returns. Other types of income verification- perhaps a second verbal verification of employment at closing can double check to be able to close a purchase money loan or to make a rate lock happen on time.
Certain loan products such as the USDA are not available, as FDA is totally closed.
The mortgage business is always pressed for time. The crunch is on now with the shut down. House Republicans vote today on legislation to step around defaulting on the national debt and end a two-week-old close of the federal government.
Eagle Home Mortgage